Analysts at Berenberg reiterated their ‘hold’ rating on food manufacturer Bakkavor on Tuesday, stating they were still playing a “waiting game” when it came to the stock.
Berenberg said Bakkavor’s recent full-year 2021 trading update did little to change its thinking when it came to the firm.
The German bank said although 2022 will be “a challenging year” for Bakkavor, as it looks to manage ongoing cost inflation and labour shortages, this pessimism had been somewhat tempered by the company’s “strong sales momentum” in the US – a market that it feels has “attractive” medium-term prospects.
“Nonetheless, despite Bakkavor trading on an undemanding 10x FY23E earnings multiple and an 6% dividend yield, we think that the near-term risk/reward is balanced and we maintain our ‘hold’ rating,” said Berenberg, which also stood by its 145.0p target price on the stock.
Berenberg added that if Bakkavor continues to maintain momentum in the US and China, while de-levering to allow further capacity investment, patient investors should be rewarded.
